Kerala Regulator Blocks Costly Adani Power Deal

The Kerala State Electricity Regulatory Commission (KSERC) has denied approval to the Kerala State Electricity Board (KSEB) for purchasing electricity from Adani Enterprises at ₹10 per unit.

The decision was based on current favourable market conditions, including improved rainfall and declining international coal prices, which, the Commission stated, do not justify such a steep tariff.

The rejection sends a strong regulatory signal aimed at curbing unwarranted electricity procurement at inflated costs during seasonal demand spikes. The Commission noted that KSEB must adopt a more cost-effective strategy rather than relying on premium-priced purchases to manage its summer power shortfall.

This summer, Kerala has been bracing for an increased power demand due to rising temperatures and growing residential consumption. In anticipation, KSEB sought emergency arrangements to supplement supply. However, the regulator emphasised that safeguarding consumer interest and encouraging fiscal discipline must take precedence over short-term expediency.

Instead of endorsing the ₹10/unit proposal, the Commission approved a comparatively lower-cost procurement deal with Shree Cement, which will supply 355 megawatts of electricity during April and May at ₹9.80 per unit. While still relatively high, the deal was cleared under special circumstances — notably the urgent need to prevent blackouts during peak months.

According to sources within the regulatory body, approving exorbitant rates without scrutiny could set a dangerous precedent, particularly as power market dynamics evolve to favour more competitive, decentralised, and renewable sources. With the Indian electricity market increasingly moving towards transparent exchange-based procurement, state utilities are under pressure to diversify their sourcing strategies and align with long-term sustainability goals.

This development also brings attention to the broader challenge of energy transition in Indian states. While solar and wind installations are expanding, the integration of renewables into grid-scale reliability remains inconsistent. In Kerala’s case, heavy dependence on hydropower, while generally clean, exposes the system to seasonal vulnerabilities — making supplemental supply during dry spells essential.

The KSERC’s decision highlights a critical need for balancing short-term supply security with long-term affordability and ecological responsibility. As the energy sector pivots toward greener models, regulators will play a crucial role in ensuring that utilities are both responsive to consumer demand and accountable in their procurement practices.

For consumers in Kerala, the ruling may provide relief from potential tariff hikes. But it also underlines the importance of continued investment in energy efficiency, decentralised solar solutions, and demand-side management to stabilise electricity access — without compromising economic or environmental sustainability.

Kerala Regulator Blocks Costly Adani Power Deal